As analyzed by the Fed watcher, Tim Duy, the FOMC was perceived significantly more hawkish than expected. The unemployment trigger (6.5%) was dropped but the FOMC has also renounced to accept an inflation rate 0.5% above the long term objective of 2%. Tim Duy thinks that the 2% inflation level is no longer a target [...]

Last week, we experienced an interesting turnaround in the ECB communication. For the first time, the ECB expressed its concern regarding the level of the exchange rate, arguing that the euro strength aggravates the problem of insufficient inflation. The speech has had the desired effect on the euro but the impact has been quite short-lived, [...]

Among the most fragile countries, the currency plays a crucial role on financial stability. As showed in our previous research, emerging currencies serve as a link between emerging equities and emerging bonds.

Figure 1 shows that, while the currencies of Turkey, South Africa and Russia are still depressed, those of Indonesia and Brazil are stabilizing and [...]

The Ukraine war is another sign of the emerging countries vulnerabilities, which had already been observed in MENA (Egypt, Syria, Sudan, Turkey…) and South America (Argentina, Venezuela). It is the result of a mix of political instabilities, social uprising, monetary fragility, debt overhang and current account deficit.

The collapse of the political regime in Ukraine has [...]

Archive for March, 2014

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